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August 20, 2010

Rural Electrification in India part 5: What Else is the Indian Gov't Doing?

Rajiv Gandhia Grameen
Vidyutikaran Yojana

Involvement Goals and
Summary

Under the auspices of the
Indian Ministry of Power and the REC, the Rajiv Gandhia Grameen
Vidyutikaran Yojana, RGGVY, project has been formed with the goal of
“electrifying all villages and habitations, providing access to
electricity to all households and to give electricity connect to
Below Poverty Line families free of charge,” within five years to
reach the goals of the National Common Minimum Programme set forth by
the central government. There are roughly 125,000 non-electrified
villages in India which is 20% of all villages . The estimated cost
of the RGGVY is roughly $3.5 billion US making this project a
technically and financially daunting undertaking (RGGVY Brochure).

The way the RGGVY plans to be
successful is through a 90% capital subsidy from the central
government to cover the overall cost of the project. With this money
they plan on creating the necessary infrastructure through creating a
“Rural Electricity Distribution Backbone” with at least one power
sub-station in each village block . From there they will build the
“Village Electrification Infrastructure” which will provide
electricity to every village and put a distribution transformer in
each habitation, and the creation of a “Decentralized Distributed
Generation & Supply System” in villages where grid connectivity
is not feasible or cost effective (RGGVY Brochue).

REC will be the agency under
which all this will occur and they will be the distributor of the
funds as well as establishing the technical specifications, bidding
conditions, guidelines, field appraisals and all other work necessary
to realize this goal.

The base idea is that by
absorbing the upfront costs of building the grid, the Indian
government will provide utilities with millions of new customers and
that this new customer base, over a long enough time scale of paying
electricity tariffs and the development that may follow, will
compensate for the initial outlay and as well as for providing energy
to those below the poverty line free of charge.

Critique of RGGVY Projects

The
ambition of the RGGVY project is only matched by its financial
riskiness. Now that the global economic crisis has made capital
harder to come by the Indian government will most likely slow down
the timescale of this project. The model of providing free power to
those who are below the poverty line may actually not be much of a
burden on the electrification scheme as they are unlikely able to
afford many energy using devices. So even though those below the
poverty line will have access to electricity, they will not have much
of a chance to use it.

Also,
a closer look at how the RGGVY defines an electrified village shows
that their goal is not as ambitious as it may first appear. There are
three targets a village must meet to be qualified as electrified. The
first is that the basic infrastructure for distributing electricity
such as wires and transformers are installed, a step which is
unnecessary for non-conventional energy sources. Next, public places
must have access to electricity and finally the “number of
households electrified should
be at least 10%
of the total number of households in the village,” (RGGVY
brochure). This 10% suggestion is a large loophole for this project
since it can be technically labeled as a success and still keep
millions of rural Indians in energy poverty.

The
last main flaw in the RGGVY plan is that it lacks plans to construct
new power generating facilities. Even if it is successful and brings
power lines to every home and village, if these lines have no power
going through them, they are useless. While it is focused on a very
important part of the problems causing rural energy poverty in India,
it does not provide a holistic solution so it must be coupled with
other efforts in order to fully solve the issue. However, the lack
of generation capacity construction in the RGGVY plan is ultimately
not an issue as the project is inherently, though not explicitly,
coupled with the Ministry of Power's Ultra Mega Power Plant and Mega
Power Plant projects which will add several gigawatts of power to the
grid the RGGVY plans to construct.

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